Car loans have been among the most sought after financial products in India since the decade and the practice of obtaining a car loan is growing exponentially. Many financial institutions and private sector banks in India have placed their focus on automotive lending to generate interest rates. Car companies in partnership with car loan providers offer customized offers to attract customers by getting a car loan at various interest rates.
Although there are a lot of cars on the market, and many of them are in line for a start soon, buying a car has become a cake stand. From budget-friendly cars to luxury cars such as sedans, there are some options. So, there are a variety of options these days for people who are willing to buy new cars at affordable prices. There is a lower interest rate for public servants depending on the number of loans and other important parameters. The Car Loan Interest Rate depends on some factors including the amount of the loan, the type of car, the credit record of the borrower, and many more.
Car Funding Process
The whole process of applying for a car loan has been simplified by the banks so that the borrowers are free. These days from application to credit approvals and disbursements can all be made online without a bank visit. The whole application process works as follows:
- Completion of the form - In the first step, applicants must complete the required bank application form with all the necessary details such as their details and other required certificates.
- Document Verification - After submission of the application, borrowers are required to upload all documents approved by the banks. Since a car is a guarantee in the event of a car loan, relevant documentation must be provided.
- Loan Approval - If the bank receives all the correct documents and finds the borrower to be able to repay the EMI of the loan on time, they will approve the loan within a short period of 2 days.
- Loan disbursement - The loan amount is issued to the applicant after a certain period of time. In other words, banks offer a percentage of the buyer's investment in the purchase of his car.
Factors that affect Car Loan Approval in India
- CIBIL Score of Applicant - The CIBIL Score plays an important role when it comes to approving loans in India. The CIBIL points are the points given to each customer by the Bureau of CIBIL based on his or her previous payment record. If the borrower is found to be consistent in repaying EMI loans on time, that person is given higher points. In contrast, lenders who were not always on their EMI payments were given lower credit scores.
- Car loan repayment period - Usually in India the repayment period for a car loan is between 1-7 years. It is in the comfort of the borrower that the borrower wants to choose. The repayment period has an important role to play in determining the monthly EMIs. If the working time is high, the EMIs are low and if the working time is short, the EMIs are naturally higher. However, consumers should adjust the short payment period as they will have to pay more interest. The Canara Bank Car Loan Pre-Payment option helps its borrowers save a lot of money on interest payouts.
- Car’s age- The age of the car is the most important factor that lenders consider when offering car loans in India. The age of the car is important because that determines the value of the car after what has already been depreciated. Usually, in India, the price of a car starts to drop when it is removed from the showroom by at least 10%. After that, with each passing year, the number continues to decline. Banks or lenders offer used car loans for pre-three-year-old cars. In this way, they ensure that in the event of non-repayment of the loan they will be able to collect the investment by repaying the loan without any further losses.
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